Jump-Starting Rural Economies

July 19, 2018

COLUMBUS, Ohio — Many rural counties in Ohio and across the nation are facing dwindling populations, reduced agricultural income and lagging job growth.

Since the nationwide recession ended in 2009, economic recovery in rural communities has not matched that in urban areas, said Mark Partridge, a professor in the College of Food, Agricultural, and Environmental Sciences (CFAES) at The Ohio State University.

In Ohio as well as in other states, many rural counties have not transitioned well from a commodity-based economy to a new economy, Partridge said. Within the state, such areas are predominately in western and Appalachian Ohio. And areas that once had a lot of off-the-farm job options, including high-paying, unionized manufacturing jobs, now have far fewer of them. Technological advances have left behind many lower-skilled workers.

The economic well-being in regions of Ohio starkly contrasts. Though Appalachian Ohio has had little growth since 1980, job growth in metropolitan Columbus has increased by around 75 percent, Partridge pointed out. Likewise, wages have risen more than twice as fast in metropolitan Columbus as in Appalachian Ohio.

“This perfect storm hit rural America: low wages, the commodity boom and bust, as well as the housing boom and bust,” said Partridge, who is also chair of the Swank program, which conducts research, teaching and outreach within CFAES.

Farm income has diminished for the past four years, and that trend is not expected to change anytime soon. However, there were prosperous times. Between 2003 and 2014, prices for commodities were high, not just for corn and soybeans, but for oil and metals, all of them spurred by foreign demand. Then in 2014, commodity prices started to decline, and they have remained low since then. Agriculture is under further pressure as a result of the current trade war with China and other countries.

This year farmers’ incomes nationwide are projected to be the lowest since 2006, according to the U.S. Department of Agriculture.

“It seems like we’re stabilizing into a new low trend line for farm incomes. That’s the reality. This is a concern for farmers,” said Ani Katchova, an associate professor and Farm Income Enhancement chair in CFAES.

Likely, only a shock in the market due to a drought or another adverse weather condition somewhere in the world that limits supplies of a crop or changes in trade negotiations could lead to an upsweep in farm income, Katchova said.

Given the job and income challenges in many rural counties across the country, it may not be surprising that rural counties across the United States are declining in population.

Since 2000, more people in the country have been moving to cities than to rural areas. That’s following decades of roughly even numbers of people moving to cities as to rural areas, said Partridge, who along with Katchova work for the Department of Agricultural, Environmental, and Development Economics in CFAES.

This is happening as a result of several factors including the exodus of young adults from rural areas seeking jobs in urban areas, as well as the federal reclassification of some counties from rural to urban.

But not all rural areas are in trouble, Partridge pointed out. Rural counties within commuting distance of metropolitan areas and those that are remote, but rich in natural amenities, are generally in better shape.

And even rural areas that are struggling with losses of population, income and jobs can jump-start their economies by working with neighboring counties not only to attract businesses to their region, but to offer good public services such as a shared school system and fire and police services, Partridge said.

“Local jurisdictions tend to think of each other as competitors,” he said. “Instead, rural areas really need to work much closer with their neighbors.”

Attracting small and mid-size businesses is preferable to a large manufacturing company because that large company may require incentives of tax cuts and may not help diversify the types of jobs in an area, Partridge said.

Rural areas may lose young adults who go on to college and jobs in metropolitan areas, but they could aim to attract people in their 30s interested in making a lifestyle change and wanting to start a family in an area with good schools and public services, he said.

Since the best predictor of future economic growth in a region is the education level of its residents, opportunities for education beyond high school, including job training programs, community and technical colleges, and are critical, Partridge said.

“I think in Ohio, we’re trying to offer people more chances for education in rural areas,” Partridge said, “but I think we can do better.”

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